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RBS latest lender to restrict interest-only

The Royal Bank of Scotland has become the latest lender to restrict interest-only lending.

It will only lend to borrowers with a minimum income of £50,000 and who have banked with them for a minimum of three months.

Interest-only will continue to be available up to 75 per cent LTV.

The changes will apply to both brokers and its direct through branches channel.

Last week NatWest suspended its interest-only offering through brokers and pledged to relaunch products this week.

From tomorrow it is introducing two purchase mortgage deals to its corporate range that will also be available as interest-only options.

The two-year fixes are available at 2.89 per cent, 60 per cent LTV with a £999 fee and 3.29 per cent, 75 per cent LTV with a £999 fee.

To be eligible for these deals a client must already have an active NatWest or RBS current account in which they have had a minimum of the last three months’ salary, of at least £1,000, paid into their NatWest or RBS current account

In addition to meeting the NatWest or RBS current account criteria, clients will need to earn a minimum of £50,000 pa gross basic salary.

This is before any regular overtime or bonus income is taken into account.

For joint applications, the main applicant must earn at least £50,000 gross basic salary.

Acceptable repayment vehicles include endowments, pensions and ISAs/PEPs. Enhanced repayment vehicles can be used provided the applicant fulfils additional criteria.

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